Condiment sales are declining, and the gimmick of "zero additive" is not working?

No preservatives, no monosodium glutamate, no sugar...... "zero additive" condiments almost "dominate" the condiment counters of major supermarkets. However, judging from the latest financial reports of listed condiment companies, the sales of main products have declined significantly, and "zero additive" is difficult to become a gimmick for enterprises to "solicit customers".

A number of industry insiders told China Business Daily that in the production process of condiments, "zero additive" does not mean that no food preservatives are added. For consumers, the marketing tactics of companies have raised their expectations for "zero additive" products. With the gradual deepening of popular science, consumers will also vote "against" on over-marketed and high-priced condiments.

Is the "zero additive" condiment not selling?

The sales volume of the main condiments declined

"Since the second half of last year, judging from the sales volume of my here, there is no condiment category with particularly good sales." The relevant person in charge of Yibo Food, a condiment distributor, told reporters, "Taking soy sauce as an example, the number of products purchased at the catering end is large, and the low-priced brands are often selected, such as Haitian, which has soy sauce products specially designed for tonnage packaging in catering channels." The number of products purchased at the supermarket end decreased compared with the same period last year. ”

Judging from the 2023 annual reports released by Haitian Flavor Industry, Zhongju High-tech, Qianhe Flavor Industry, and Jiajia Food, the sales volume of the main products has decreased or slowed down to varying degrees. Haitian Flavor's soy sauce, sauce and oyster sauce revenue and sales volume all declined; Zhongju High-tech's annual revenue declined; Although Qianhe Flavor Industry has maintained its annual performance growth rate in 2023, its revenue and net profit growth in the fourth quarter of 2023 have declined significantly; Jiajia Food, which claims to vigorously develop "zero additives", will have a large loss in 2023.

Major brands are gradually "involuting" in the "zero additive" condiment track, which has not brought considerable revenue to the company. Taking Jiajia Foods as an example, in 2023, it will successively launch a series of "salt reduction light soy sauce" and "zero additive" series products, covering light soy sauce, dark soy sauce, aged vinegar, cooking wine, oyster sauce and other categories. However, in 2023, its soy sauce product revenue will decline by 16.96% year-on-year; The revenue of vinegar products fell by 24.13% year-on-year, and the revenue of chicken essence and edible vegetable oil also declined to varying degrees.

The reporter consulted the Jiajia Food Securities Department, which said that the company is still taking "soy sauce" as the main strategic direction in the future, and in the future, it will still strengthen the sales of high-end series of products such as "zero additive" and "zero salt reduction and zero additive".

The performance growth rate of Qianhe Flavor Industry, which is mainly engaged in "zero additive" products, has also slowed down. According to the calculation of China Securities Construction Investment, the gross profit margin of Qianhe Flavor Industry in the fourth quarter of 2023 decreased by 4.36 percentage points year-on-year. In the first quarter of 2024, the year-on-year growth rate of Qianhe Flavor's revenue and net profit will only be 9.28% and 6.66%, which is far from the growth rate of 69.81% and 162.94% in the same period in 2023.

Qianhe Flavor Industry pointed out in the annual report that the production capacity of the condiment industry is relatively saturated, the stock competition of the mainstream condiment market is more intense, and the company further adjusts the price of products, and the discount promotion efforts are increased and the frequency increases.

Can't tell the story of "zero addition".

Aren't consumers buying for "zero additive" condiments? The reporter used "zero additive" soy sauce as the keyword, and searched on multiple social media platforms to see that "'zero additive' soy sauce is unpalatable and is an IQ tax".

The reporter visited offline supermarkets in Beijing and found that the "zero additive" condiments are very eye-catching, almost occupying the core position of the shelves, and each condiment brand has launched "zero additive" soy sauce products. The reporter saw that the "zero additive" soy sauce ingredients are mainly water, non-GMO soybeans, wheat, and edible salt.

The reporter consulted a registered nutritionist on the "zero additive" soy sauce ingredient list, who said that in addition to the common soy sauce raw materials such as "water, soybeans, wheat, and salt", what can make ordinary soy sauce into premium soy sauce is the content of amino acid nitrogen. However, the content of amino acid nitrogen can be "cheated", such as adding sodium glutamate, 5'-flavored nucleotide disodium and yeast extract to soy sauce, which are not marked on the label. Strictly speaking, the addition of these substances cannot be counted as "zero addition" in the true sense.

"Zero additive" is more of a play on words? Sun Baoguo, an academician of the Chinese Academy of Engineering and a professor at Beijing Technology and Business University, previously publicly stated that different companies have different definitions of "zero additives", for example, the nominal "zero additives" on the packaging of a certain brand of soy sauce products means that no monosodium glutamate and preservatives are added; The "zero additive" label of a certain brand of vinegar product refers to the fact that alcohol and potassium sorbate are not added in the production process.

"'Zero-additive' soy sauce is more expensive and has a shorter shelf life." A consumer told reporters, "Especially after opening, if you leave it for a period of time, the taste of 'zero additive' soy sauce will change." After buying 'zero additive' soy sauce a few times, I still think that ordinary soy sauce is more cost-effective. ”

The giants are busy looking for new selling points

The sales of condiments are declining, and dealers are "suffering". A distributor told reporters that in the second half of 2023, it was still acting as an agent for the sale of Haitian soy sauce, but Haitian Flavor unilaterally terminated the cooperation contract. At present, it is coordinating with Haitian Flavor to return the inventory products and refund the payment and other related matters.

"There is still a lot of inventory that has not been digested, and Haitian Flavor has not given a clear solution." said the above-mentioned dealer.

In Haitian Flavor's 2023 annual report, the number of its distributors dropped to 6,591 in 2023. At the end of the first quarter of 2024, the number of its dealers decreased again to 6,506. According to the data, at the end of 2021, the number of Haitian Flavor distributors reached 7,430, while the number of distributors in 2022 was 7,172.

At the 2023 performance briefing, Pang Kang, chairman of Haitian Flavor, said that there is no positive proportional relationship between the number of dealers and revenue, and the decrease in the number of dealers is due to the company's initiative to optimize some dealers; On the other hand, some small-scale dealers with low efficiency and lack of competitiveness have been eliminated from the market.

In the dealers to "save money" is also in the torch high-tech. Some dealers revealed that starting from April this year, Chubang, a brand of Zhongju High-tech, stopped giving dealers a free fee. This also means that in the future, the distributors who act as agents of Kitchen State will not only digest the inventory, but also may have to bear the marketing costs of this part of the product.

Giants under pressure are also looking for ways to create new selling points. In its reply to investors, Haitian Flavor said that the condiment industry is a "small product and heavy asset" industry. Heavy capital investment, complex industrial technology, and long input-output cycle are the basic issues that the entire industry has to face. At the same time, the characteristic flavor of fermented condiments such as soy sauce, vinegar and sauce determines that the development of the industry requires long-term precipitation and continuous innovation of brewing technology and fermentation technology.

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